WARREN BUFFET: A GREAT WEALTH CREATOR
The name of this legend is probably known by every one and he is a great investor and wealth creator. He is in the topmost rich people of the world and owner of lakhs of dollars. Warren Buffet not earned this huge amount on a single day. To become rich, there is a lot of efforts of hardwork and lot of determination. He is a master who pioneered many techniques in the in the investment world and these are definitely great lessons to learners like us. Let us go through them, which will definitely help us in creating some wealth at least!
INVESTING IN LOSS-MAKING COMPANIES:
In 1963, there were lot of rumours that The American Express Company is going to be collapsed due to many scams in the company. But Buffet is different! He invested in this company and made all the economists and economic analysts surprised.
As all expected, the company was not closed. It bounced back like a rubber ball. The turn around had made multi fold profits in the successive years and finally, along with the company, Warren Buffet made a huge amount of money! He observed the credit cards of the American Express Company are used by almost every one and this may lead to growth of the company in future. Though the other businesses of the bank did not do well, the credit card portfolio had given huge profits and turned around. So Buffet was the early bird to identify this by thinking differently!
INVESTING IN INSURANCE COMPAIES:
From 1962, Warren Buffet bought the shares of a textiles company, at a throw away price and became a major stake holder. As Buffet became the promoter, the company gradually recovered from its losses and made good profits. Buffet gradually started to convert his profits of this textile company as investment in insurance company shares. He rightly assumed the modus operandi of the insurance companies that every policy holder makes a prior payment of his premium for his life and there will not be any question of bad debts and also the payment made to the policy holders only on the maturity of policy and to the nominees of the policy holders on death. But these two occasions are lesser than the receipt of the premiums and there will be a lot of excess money accumulated by the insurance companies. And this money can be invested to make it multiplied and the profits can be made by the companies.
This observation of Warren Buffet really worked out and earned him huge profits.
INVESTMENT DURING SLUMP:
While there is a blood bath and panic in the market, go and invest. This is another wonderful strategy of Buffet. Warren Buffet found a time of recession in the economy and the share prices fell steeply. Even noted company shares had no exception. Buffet made this as opportunity to investment and bought the shares of companies with good fundamentals. After a few months, the economy got revived and the companies started to give decent returns and Buffet was the huge money maker!
SELLING AT A RIGHT MOMENT:
At his 39th year Warren buffet sold off all his shares worth ten million dollars. He also advised all investors to make investment in the municipal bonds. In those days the income on bonds was not that much lucrative. But the mind of this master worked out really well, as he expected and in 1969 the market got shaken like a quake and all the share prices came down.
As told earlier, Buffet already shifted his investment to a safe mode and he was ultimately winner of good amount of money in both ways, ie., selling at a right moment and investing in a secured portfolio/
INVESTMENT IN COCA-COLA:
Once again, the sensible observation of Warren Buffet, we can see in this occasion. Now a days, Coca Cola has craze everywhere but 40 years back it was not so. The share price of company was around 11 dollars and there was no demand and craze for these shares.
Buffet's great vision had been focussed on this company. He scrutinized the balance sheet very well and found two valuable observations. One is the brand value. In general a well established company after several years get good brand value but the branc Coca Cola has a strong brand vaule. Second obervation is the company had no sales outlets at several areas and if the outlets are opened at these places, the sales will be increased. So there is a good scope for expansion of the business for the company.
Thinking as above, Buffet made his investment in the coca cola shares at 11 dollars each. After five years the stock quoted 86 dollars! You can imagine how much amount of money was made by great master of investment Warren Buffet!
SILVER IN STEAD OF GOLD:
You and I know that the value of gold is really good and the investment in this precious metal always fetches good returns. In those days, while the people are after gold for investment, our hero Buffet did not see at that metal! He started investing in silver, where the price is very low and also returns are poor! But after some period, the price of gold reached its peak and started to dip. Buffet's plan worked out as the price of silver went in opposite direction of the price of gold and gave him multifold returns!
The way Warren invested in a different manner with a lot of great vision is really ideal for any investor who wants to make money. One has to read Warren Buffet before entering the investment markets! Let us learn some more about this investment Guru next time!
Like it on Facebook, Tweet it or share this article on other bookmarking websites.